I know what you are going to think, vending machines are old-school and not really relevant in this digital age but let me prove to you the contrary with the example of China. Thanks for mobile payment, famous brand investing in it and new offers vending machines in china are being revived.
Vending machine in China, why is it an opportunity for foreign companies?
With the democratization of QR code and online wallet vending machines are gaining in popularity. Once again, the convenience of this machine is up to today’s standards.
As you can see on the below picture, you can pay vending machines with WeChat in China thanks to the QR code and online payment systems. Some even have a palm reader that facilitates your shopping experience.
Belonging to the RMB 226billion convenience store market (estimated in 2018) including stores you may know as FamilyMart, Alldays but also Lawson, autonomous retail should not be overlooked since it is expected to boom.
Note that China’s market size of vending machines reached RMB 19 billion in 2018 with about 60% year-on-year growth!
Vending machines are particularly efficient to distribute any kind of product: from snacks to skincare and makeup products and during this epidemic times even masks and hydro alcoholic gel. This way of distribution is suitable for pretty much everything. It is also a good technique to have more locations (at a lower price since you do not need to pay a rent or on-site employee) to sell products and thus cover more places.
Case study: Vending Machines with Luckin coffee
It is the largest coffee chain in China (yes, Luckin Coffee exceeded Starbucks in this market). Thanks to its digital strategy and app, in only two years and a half, Luckin Coffee surpassed Starbucks which took about twenty years to get where it currently is. To get this fast expansion, Luckin operated at a loss and it worked! Some other companies (including Starbucks) even adopted the same strategy to grow faster. A well-crafted strategy with a free cup of coffee for when you download Luckin’s app, coupons, delivery but more than anything else, the big price difference with Starbucks which is very expensive. Luckin also determines where new stores will open according to its customers’ location and recently chose to start selling coffee and some other products through vending machines. But how and why? Here are the answers:
Luckin Coffee will launch two types of machines: Luckin Coffee Express and Luckin Pop Mini. The first one will offer freshly brewed coffee while the second one will offer Luckin Coffee products and other types of products as water or sodas.
Luckin Coffee’s strategy is well done: it plans and guarantees to provide drinks that have the same quality and taste as the ones you can find in their stores. Moreover, it offers the same prices it customers may pay on e-commerce platforms. They will be able to place their orders on the store’s app, scan the QR code on the vending machine, pay through an online payment system and enjoy their drinks!
It is a good strategy since it offers the same products with the same quality and prices. The use of vending machines linked to the app is an efficient way to develop the physical network and the presence of the brand in Chinese cities. Choosing the right spots to place your machines is also a key point. For example, Luckin chose to locate its vending machines in popular locations such as malls, bus terminals, campuses, airports, …
How can you take a step forward in the China vending machine market?
As mentioned earlier in this post, vending machine can be a great way to distributes your products in China. However, whether you want to launch your own vending machine-like Lukin coffee or want to rent machines in stores such as family mart or the metro station you are going to have to convince buyers and distributors that your products are worth the shot.
Being able to sell your product in vending machines where there is a lot of traffic can bring enormous exposure to your brand and would be less expensive than having to rent a local. brands that are now selling in these vending machines and convenience stores did not get this chance by randomly emailing distributors, they did a real marketing work before that. They made sure their brand could get notoriety and were credible before even trying to negotiate with distributors.
Sames goes for Brands such as Luckin coffee. They work hard to gain the loyalties of their customers and they were able to launch vending machines and reach out to even more customers.
Here are some options for you to get exposure for your brands/products:
Making promotion through WeChat, the most popular messaging app in China with over 1 billion daily users, is essential. It allows users to chat, share text, images, music and much more. WeChat offers you the possibility to share visible content with everyone from your official account and that is why it is a must for the spread of marketing content in China.
1. WeChat group
Having a WeChat group allows the information flow to be fast. It is an essential point to develop your brand image, send a message and notify your customers but also to initiate discussions about your product. Animating a WeChat group is helpful to develop the awareness of your company.
2. WeChat brochure
An efficient way to explain what your business is about, but also to inform about the latest releases. WeChat brochures are indispensable in your marketing strategy to simply explain to customers what you are selling, where, if it is a limited offer and other kinds of information about your product.
3. WeChat mini program
All kinds of companies use WeChat mini-program: it is like a mini-app in WeChat. It can be informative, entertaining and commercial. Some brands like Chanel creates mini-programs for the promotion of its events while others develop a mini-program looking like a game to promote their new product and educate their followers. Brands commonly use mini-programs to sell their products, offer delivery services or as a mobile version of their website.
Users can easily access mini-program directly from the mini-programs section of wechat.
Chinese Twitter, perfect for effectively disseminating your content and be commercial with coupons, game contest etc. A popular platform offering a large audience, Weibo is ideal for reaching the target you have set. This app is also focusing on visual content which is perfect if you want to promote your products in vending machines. This will allow consumers to see how it looks and makes possible for them to recognize it when they will be in front of one of your vending machines.
Douyin is the equivalent of TikTok in China. Very successful in this country, this short video app literally blew last year and became the second most downloaded app in 2019! With 500 million monthly active users, it has a relatively young user base (nearly 75% of them are aged between 20 and 34 years old). It offers you the possibility to reach Chinese youth, an audience that you may aim at and could miss without a presence on this viral app.
1. Douyin algorithm
Douyin algorithm is perfect to reach out to the exact target you are aiming at. Douyin uses an algorithm system to show to each user contents they will be interested. Make sure to use the # to distinguish your account and ads from any other that have nothing to deal with and be recommended to potential customers thanks to Douyin’s algorithm. You have to take advantage of it.
2. Douyin – Tiktok Ads are Cheap
Douyin offers a wide range of ads: open-up display ads (appears for few seconds when you open Douyin), stickers ads, feed ads (ad video among the other, it is well received), and more.
Douyin is relatively cheap when it comes to advertising: of course, you can spend a million RMB in a communication campaign on Douyin, but other options exist. For example, the cost per thousand impression option exists for 50-60 RMB or also the cost per click option from 2-5 RMB to 20-30 RMB. It will allow you to have a good control of your ad budget.
3. KOLs (Key Opinion Leaders)
One of the most efficient ways to promote a product is to work with one or several influencers. Kols have already gained the trust of their followers base. Thus, you will gain the influencer’s followers’ trust but also gain in visibility since these influencers have a well-established fanbase. They have different options to promote your products: contest, reviews, give-away, hyperlink, etc… Knowing that trust is a key to succeed in the Chinese market, selecting the right influencers can be a real game-changer in your marketing strategy.
To sum up
Being visible when you want to use a new type of distribution is essential in China, even more if you want to use the vending machines channel. How does your consumer know that they can find your product in a vending machine just 100 meters away from their home? You have to tell them! You have to communicate about it!
Mini-programs and apps are a great way to promote your content. Chinese consumers use their phones for pretty much everything in their daily life, a lot more than computers anyway. Loyalty programs, online shopping, news, location of the nearest shop and vending machine or even special offers!
So? Does the idea of using vending machines thrills you but you don’t really know how to proceed?
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